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The Credit Cruncher was conceived to help you to keep up to date with credit crunch and recession developments, it provides some helpful credit crunch advice and it addresses personal debt. The Credit Cruncher also seeks to explain how the credit crunch started and shed some light on the worldwide recession. Recently, we have begun to look at how BREXIT will affect the UK economy. Please feel free to leave comments where relevant.

9 Sep 2009

Personal money troubles

There are two main aims of this blog, one is to report on the global economic crisis, the other is to talk about personal debts with emphasis on using 0% credit cards to pay off debt.
I recently got very close to completely wiping out my own debt using 0% interest deals but have had a bit of a hiccup when I was within sight of my goal. I reverted to using my credit card safe in the knowledge that I would (soon) be able to clear my debts, but unfortunately have been adding to the balance at a greater rate than I am paying it off. I am resolved to be more disciplined before the onset of the expenses that will precede Christmas...
In the meantime I have been grappling with my household fuel provider (dual gas and electric) and began to think about how creeping household bills have helped to build up debt without many people even realising what is happening to their bank balance.
The scenario goes like this:
House fuel bills have been growing at an alarming rate and as most people pay these bills by Direct Debit, they have not really realised how much is leaching out of their bank accounts (recently my provider tried to increase my payments by 60%). The upshot of this is that a lot of people just accept their increased payments (or more likley don't even notice until it's too late). My own approach is to have all my outgoings in a spreadsheet which makes them easier to manage.
My questions to the householder who has just received a huge increase in their Direct Debit would go as follows:
  • Have you had a corresponding rise in income? (I expect the answer to be NO)
  • Have you adjusted your outgoings to allow for this extra expenditure? (In reality I would also expect this answer to be NO)
If the two questions above are answered in the negative, there could be a problem when it comes to reconciling income with expenditure, and the pressure valve in most cases is the good old credit card. I would realistically expect credit card spending to take the strain of the increase in household bills and this applies to food, insurance or any other expense that can creep up on you unexpectedly.
There are only two answers to the problem:
  • Increase your income
  • Cut your spending to allow for the increase
Otherwise you are heading towards debt that could take an awful long time to pay off.

Related posts:
the decline of my debt
where did it all go wrong?
how to get out of debt

Are we in too much debt?
credit card warnings


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